Speaking in a very personal manner, as a writer, it pains me to see lore written for one of my favorite games that doesn't thematically fit the source material, that is, presuming this was written recently. If this was written first and the game expanded beyond it, that would be an entirely different thing altogether. I may end up writing a detailed examination of this lore as I type this post out, so apologies in advance if I make any lore assumptions that may not actually mesh with the base game. I also apologize if it feels or reads as a disjointed mess. I am writing as the thoughts come.
I do fully intend this as constructive criticism, as well as an examination of the newly provided lore.
First and foremost, framing this as 'a legend of old' passed down through the 'Order of the Guide'. The Guide has always been an important and knowledgeable character, from the start of Terraria to its current incarnation, even if all they did was give us recipe information and story progression hints. That importance was jacked up through a very explicit connection to the Wall of Flesh via dumping his voodoo doll into the lava of the Underworld. Much is implied, nothing is really explicitly stated regarding this except the Cyborg referring to the WoF as the Wall of [Guide]. Granted, that may be a reference to fan speculation rather than any concrete confirmation. After all, it's only one NPC stating anything.
What this framing device does, from what I can tell, is give an interpretation of potential lore, a legend, perhaps one or more in-universe peoples' way to make sense of what's going on. That gods have created multiple worlds in an attempt to test the concept of fairness and/or balance.
However, the entire lore is depicted as the entirety of this being ancient knowledge, that everything you do in-game is part of this legend. At least, that is how it is implied from my perspective. A cut-and-dry this-is-as-is story written on old, fading parchment. This creates a thematic paradox of 'everything is valid, but everything is as this lore describes', and that each 'living world' behaves exactly the same because the Gods willed it.
I have a problem with this approach, as it tries to satisfy both the desire to have an open world left open to interpretation as well as cohesive lore to explain the game's mysteries, which is impossible to reconcile in five small pages of illustration and text. You cannot have both in this case.
Second, the idea of Gods having this as a sort of balance experiment fails when you think about the purported purpose of the Crimson, Corruption, and Hallow Vs. how they actually work. Now, the Hallow does make some sense in the regards of aggressive and forced establishment of balance, it is combating the aforementioned evils. However, the Hallow is themed around the concept of Order, while the Corruption and Crimson are themed around Chaos. Two diametrically opposing forces that are extremes of either side of the concept of balance, which should be a harmonious existence of either. All three of these opposing forces do not make sense when you take into account that they're meant to bring balance.
The Evils:
Corruption: The idea of the Corruption being a manifestation of the collective negativity and evil of mankind is a brilliant concept in theory. It creates a natural reason for it to exist to begin with, to give it a thematic foe for the Hallow. It is unambiguously evil, dark. It looks diseased, cursed. None of this screams balance or fairness. In the provided lore, it is described as a cancer, and do some degree, it would seem as such, but it's more akin to necrosis than cancer. Necrosis is, very simply, when living tissue decays due to disease or other harmful factors such as untreated wounds or extreme lack of hygiene. The corruption, thematically, is the death of the world.
Crimson: The idea of the Crimson being a single emergent hive mind being is an interesting concept, except it would better fit the bill of an all-consuming cancer rather than what the lore would imply. It is meat, it is bloody, it consumes and converts the very stone into its own flesh, twists living beings into twisted facsimiles of itself, and most importantly, it can produce ichor, which is stated to be the literal blood of the gods.
It has been theorized that the Crimson is a god-like being who was killed, and who is reconstituting itself using whatever it can get ahold of, essentially regenerating itself from a single cell, and considering the fact that the Brain of Cthulhu outright spawns in this location, it is not a large leap of logic to presume the Crimson is Cthulhu's literal corpse. Of course, this is a theory.
The Hallow: I do not have many issues with the lore regarding this biome, it is very clearly an example of light not always being good or soft. The major issue I have with it, however, is the notion that it further serves the enforcement of balance, when it is just as virulent as the aforementioned evils. It spreads rapidly, and while it does fight the Crimson and Corruption, it feels thematically more like the application of a knight templar doctrine on an extreme planetary scale. Just as dangerous as the literal death and cancer that came before it, only wrapped in a more aesthetically pleasant facade.
Third: Please correct me if I am wrong, and if I am, please skip ahead to the next point if there is such.
Cthulhu has always had an important role in Terraria, naturally. His Eye and Brain being very clear indications of his existence at least conceptually within the world(s) of Terraria has been known. Though, it was to my understanding that he was explicitly stated to not be added as an actual fightable boss, and that the Moon Lord was, himself, supposed to be Cthulhu's brother. Granted, this new lore, if 100% official, does kind of nix that, but it does, to me at least, make this new lore feel like it was made up whole cloth with no regard to previously established lore and thematic integrity.
Fourth: The Dungeon, Clothier, Mechanic, the Lunatic Cultists, the Jungle Temple, & Cthulhu. Nothing about this makes sense. I'll just lay it out right now, it does not make any sense. First, we'll start with the obvious. The Tablet that the Lunatic Cultists use to summon the Moon Lord is kept within the Lizahrd Temple. The entire reason they can even get to it in the first place is because you, the player, unlocked the door and killed the Temple's guardian. Why did the Lizahrds have it? What stake did they have in keeping it? Where do they fit in this new lore?
Second, the Mechanic. She says nothing that indicates she was the one who created the Twins, Destroyer, or Skeletron Prime. Granted, she's the only other person aside from potentially the Goblin Tinkerer, Steampunker, or the Cyborg who could make these mechanical simulacra... but then the Steampunker appears after the first Mech boss is defeated, which to me at least implies some sort of connection, more than the Mechanic has.
Third, the Clothier. The Clothier is outright cursed, implicitly by Skeletron, who is some sort of undead humanoid skull and humanoid hands, a far cry from the Moon Lord. There is no indication of the Lunatic Cultists having anything to do with him, or Skeletron, or the Dungeon Guardian.
Fourth, The Dungeon itself is simply a large building filled with the undead, which you will find in the purity, that is, anything not tainted by the three evils of the world. They seem indigenous to the world itself, rather than the evils that permeate it. Though, that is speculation on my part.
Fifth, the Lizahrd Temple, which interestingly enough is not included in the Lore, in spite of playing a very important role just by having the tablet the Cultists take out of the Temple. Their absence from the lore is striking and obvious. And what of Plantera? Where does it fit into the lore? Why does it serve both as the gatekeeper to the Temple itself, as well as the trigger for things getting busier at the Dungeon?
Overall, this shared lore seems to exist just to exist, to placate those who want lore to the story, and maybe potentially to test the waters as far as future ideas and updates come out. I like the idea of lore, personally, and having answers to my many questions would be excellent, provided they fit in with the content it's supposed to reflect.
Whomever wrote the lore, I thank you for your work, I appreciate the attempt, but I would most heartily suggest either redoing the lore, maybe with some player input since everyone is clearly invested in seeing Terraria as a game and story grow, or leaving this as one potential in-universe interpretation of what is happening out of countless others, and not making it be an end-all-be-all like it implicitly seems to be.
Now, it's past 4 AM and I really should have gone to bed an hour ago.